Category Archives: refining margins

Marathon Petroleum Corp (MPC.N) reported a smaller-than-expected quarterly profit as lower margins and realized prices continued to hurt its earnings.The company, whose operations are concentrated primarily in the Midwest, Southeast, and Gulf Coast regions of the U.S., said its refining and marketing gross margin fell nearly 38 percent to $10.75 per barrel.Refiners have seen their margins shrink due to the narrowing price difference between U.S. Crude CLc1 and globally traded Brent futures LCOc1, to which the price of refined products are tied.”Despite a challenging quarter, we remain optimistic as we move forward into 2017, given the signs of market rebalancing and sustained strong demand,” Chief Executive Gary Heminger said.On an adjusted basis, quarterly profit was 58 cents per share, much below the analysts’ average estimate of 81 cents per share, according to Thomson Reuters I/B/E/S.The company also said it plans to dropdown certain assets to its midstream master limited partnership MPLX.

If Big Oil was a two-engine airplane, you could say it’s been flying on a single engine since energy prices crashed in 2014. Now, the second motor is sputtering.

The major integrated oil companies, including Exxon Mobil Corp., Total SA and BP Plc, have relied on their so-called downstream businesses, which include refining crude into gasoline, oil trading and gas stations, to cushion the losses on their upstream units, which pump crude and natural gas.

BP, the first major to report second-quarter results, showed the impact on Tuesday. The British company said its downstream earnings fell to $1.51 billion from $1.81 billion in the first quarter and $1.87 billion a year ago. Refining margins were the weakest for the April-to-June period in six years, BP said.